We need fundamental reforms in how Michigan both spends and collects our taxes.

This isn't some obscure argument best left to academics and bureaucrats. It's at the core of such living room issues as the rising costs of college, the dependability of your local cops and firefighters, and the security of your job.

What to do?  We have a choice. We can keep staggering along, patching the state budget year after year the way we patch potholes. Or we can truly transform the way our state works. A durable solution requires finding common ground, far away from the normal partisan, transactional Lansing politics.

Here are eight thorny ideas to jumpstart the discussion:

1. Reduce Prison Spending. The state spends $1.9 billion a year to warehouse some 125,000 prisoners, parolees and probationers. The state spends another $1.9 billion a year on community colleges and universities educating around 300,000 students. Which is the better investment? Michigan's incarceration rate is 40 percent higher than neighboring states.

2. Keep Better Score. Michigan automatically sends billions in sales taxes straight to school districts and local governments. Instead, we need a statewide scorecard to spur local efficiencies in budgets, staffing, pay and benefits. Money should follow concrete results.

3. Erase Borders. Michigan has 83 counties, more than 1,200 townships, nearly 500 cities and villages with fewer than 10,000 residents, more than 550 public school districts, more than 200 charter schools, and 57 intermediate school districts. Despite cooperative talk, much duplicated bureaucracy remains. School leaders keep calling for large-scale consolidation of business operations. Such ideas could gain traction if state aid were tied to proven efficiencies.

4. Critically examine public sector pay and benefits. Michigan taxpayers are on the hook for $35 billion in unfunded public sector pension and health care costs. Local government costs in Michigan are hundreds of millions of dollars above those in states without binding arbitration in contract disputes.

5. Sales Tax: Lower the rate and broaden the base. All but 11 states impose sales taxes on more types of services than Michigan. Significant sums could be raised by taxing more items while lowering the rate.

6. Business Tax: Lower the rate and broaden the base. Fewer than 500 Michigan businesses pay more than a third of the entire Single Business Tax. More than 80,000 businesses pay no SBT.

7. Graduate the income tax. Michigan could raise the state tax rate for those with highest incomes. They, in turn, would likely see little or no actual tax increase because state taxes can be written off federal returns. Thirty-seven states do this now.

8. Consider beverage taxes. Some states tax beer at five times Michigan's rate of two cents per bottle. Others raise significant cash through sales taxes on soda pop.  It's hard to imagine producing businesses leaving Michigan because our taxes on unhealthy beverages are too high.

A paper containing full discussion of these ideas is online at www.thecenterformichgian.net. We welcome probing questions, vigorous debate, and improvement of these concepts. It's our collective future. Let's face it through engaged citizenship.

By Phil Power and  John Bebow,  The Center for Michigan